Midsize Cities: The New Center of Gravity for Green Profitability

Mid-sized cities lead in real estate profitability

The study « La Vigie de GoFlint, » based on the analysis of 147,814 apartments in French cities with populations over 100,000, sends a clear message: medium-sized cities now dominate post-energy renovation rental profitability. In more than twenty urban areas, renovating a 45 m² one-bedroom apartment rated G to achieve a C energy performance certificate (EPC) can yield a net return of over 3%, sometimes even approaching 5%.

Leading the rankings, Le Mans boasts an impressive net return of 4.9%, along with an average gain of 32,000 euros post-renovation. The winning combination lies in affordable purchase prices, strong rental demand, and an older housing stock ripe for improvement. The area also benefits from a strategic location between Paris and the Atlantic corridor.

Mulhouse closely follows with a 4.7% net return for a total investment under 85,000 euros, making it one of the most competitive markets in the study. Ranked third, Nîmes offers a 4.6% return with a payback period of less than two years, due to a balanced equation between renovation costs and immediate value enhancement.

Beyond this leading trio, several cities such as Saint-Étienne and Metz present yields between 3.5% and 4.5%, with total investments often below 100,000 euros. The study also highlights a key structural element: a comprehensive energy renovation project, including purchase, notary fees, and renovations, typically ranges from 80,000 to 200,000 euros, making it accessible to a wider audience of individual investors.

This trend is reshaping investment in energy-inefficient properties. As Mihai Gavriloiu, CEO of GoFlint, points out, « the rise in importance of environmental criteria is redefining real estate profitability, with medium-sized cities emerging as new hubs of green profitability."

The Price Effect Stifles Profitability

Conversely, large metropolitan areas struggle to compete. The acquisition costs are too high to absorb the expenses of energy renovation without compromising rental yields. In Paris, a renovated one-bedroom apartment typically shows an immediate capital loss of €29,000, with a limited net yield of 2.2%. The already high pressure on prices negates the positive impact of renovation.

This isn't an isolated phenomenon. In Toulouse, net yield drops below 3%, while the payback period exceeds six years. The dynamics are straightforward: high entry prices, limited appreciation after renovation, and sluggish rent growth. As a result, expected profitability erodes, prompting investors to reassess their strategies.

Mid-sized cities, in contrast, benefit from a more favorable equation. They combine low entry prices, manageable rental demand, older housing stocks, and short-term profitable renovations. These areas now represent zones where the coupling of energy performance and financial return reaches its optimal level.

One final point strengthens this shift: the administrative complexity and instability of the MaPrimeRénov’ program, where changing criteria and scales hinder project planning. As Mihai Gavriloiu highlights, the system remains « a hindrance » for many investors, extending timelines and reducing the financial clarity of projects.

In a context of housing scarcity, rising interest rates, and regulatory uncertainties, the profitability map is inexorably shifting towards France's mid-sized cities. Here, investment remains accessible, manageable, and now — highly profitable.